Century Communities Reports Second Quarter 2016 Results

Century Communities, Inc. (NYSE:CCS), a top-25 U.S. homebuilder of single-family homes, townhomes and flats in select markets, today announced financial results for its second quarter ending June 30, 2016.

Second Quarter 2016 Highlights Compared to Second Quarter 2015

• Net income grew 34% to $13.1 million
• Pre-tax income increased 32% to $19.1 million
• Home sales revenues increased 38% to $257.2 million
• Home deliveries increased 21% to 768 homes
• Adjusted homebuilding gross margin increased 36% to $54.3 million
• Adjusted EBITDA expanded 34% to $25.5 million
• Net new home contracts grew 21% to 869 homes
• Backlog dollar value increased 17% to $406.7 million
• Open communities at the end of the quarter increased 12% to 91

“We delivered second quarter results in accordance with our plan with double-digit gains in home deliveries, revenues, new contracts and backlog value. We’re pleased with this progress and the balanced contribution to our success from all of our major markets during the quarter,” stated Dale Francescon, Co-Chief Executive Officer of the Company. “We increased adjusted gross margin by 36%, which more than offset additional SG&A investment to support our growth initiatives. We enter the second half of 2016 with an optimistic growth outlook and we remain confident in our ability to accomplish our full year goals.”

“During the second quarter, we experienced an overall higher level of activity with ten new community openings helping us capture additional traffic in our neighborhoods,” said Rob Francescon, Co-Chief Executive Officer of the Company. “The number of new contracts rose in every region, with Nevada nearly doubling. Even with the 21% increase in deliveries and strong revenue growth, our backlog continued to expand. Most of our markets are experiencing favorable homebuilding conditions and interest rates remain near record lows. These positive factors support a favorable backdrop for continued execution of our effective growth strategy.”

Second Quarter 2016 Results

Net income for the second quarter 2016 was $13.1 million, or $0.62 per share, compared to $9.8 million, or $0.46 per share, for the prior year quarter. The improvement in net income was primarily attributable to an increase in home sales revenues.

Home sales revenues for the second quarter 2016 were $257.2 million, compared to $186.8 million for the prior year quarter. The growth in home sales revenues was primarily due to an increase in homes delivered to 768, compared to 636 in the prior year quarter, and a higher average selling price of homes delivered, increasing to $334,900, compared to $293,700 in the prior year quarter. The increase in average selling prices was largely due to a shift in regional and product mix from our new communities.

Homebuilding gross margin percentage in the second quarter 2016 was 19.2%, as compared to 19.6% in the prior year quarter. Largely due to product and geographical mix, adjusted homebuilding gross margin percentage, excluding interest and purchase price accounting in cost of homes sales revenues, was 21.1%, compared to 21.3% in the prior year quarter. SG&A as a percent of home sales revenues was flat at 12.2% compared to the prior year quarter.

Net new home contracts in the second quarter 2016 increased to 869 homes, an increase of 21.0%, compared to 718 homes in the prior year quarter, largely attributable to a higher number of average open communities, as well as an overall increase in absorption rates. At the end of the second quarter 2016, the Company had 1,070 homes in backlog, representing $406.7 million of backlog dollar value, compared to 1,005 homes, representing $348.0 million of backlog dollar value in the prior year quarter. At the end of second quarter 2016, the Company had 91 open communities, an increase of 12.3%, compared to 81 open communities at the end of the prior year quarter.

Balance Sheet and Liquidity

As of June 30, 2016, the Company had total assets of $971.1 million and inventories of $869.7 million. Liabilities totaled $540.3 million, which included $412.9 million of long-term debt. At June 30, 2016, the Company’s ratio of net debt to net capital was 47.0%. As of June 30, 2016, the Company had $140.0 million of availability under its unsecured credit facility and the $100.0 million accordion feature thereunder was undrawn.

Full Year 2016 Outlook

David Messenger, Chief Financial Officer of the Company, commented, “We are encouraged by the healthy pace of activity in our communities year to date. Based on our current market outlook, we expect home deliveries to be in the range of 2,500 to 3,000 homes and our home sales revenues to be in the range of $850 million to $1.0 billion. We now expect our active selling community count to be in the range of 85 to 90 communities at the end of the full year 2016.”

Conference Call

The Company will host a webcast and conference call on Tuesday, August 2, 2016 at 5:00 p.m. Eastern time, 3:00 p.m. Mountain time, to review the Company’s second quarter 2016 results, discuss recent events and conduct a question-and-answer period. To participate in the call, please dial 877-705-6003 (domestic) or 201-493-6725 (international). The live webcast will be available at www.centurycommunities.com in the Investors section. A replay of the conference call will be available through September 2, 2016, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13640040.

About Century Communities

Founded in 2002, Colorado-based Century Communities is a builder of single-family homes, townhomes and flats in select major metropolitan markets in Colorado, Georgia, Nevada, Texas, and Utah. The Company offers a wide variety of product lines and is engaged in all aspects of homebuilding, including the acquisition, entitlement and development of land and the construction, marketing and sale of homes. Century Communities is a top-25 U.S. homebuilder based on homes delivered. To learn more about Century Communities please visit www.centurycommunities.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on historical information available at the time the statements are made and are based on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company’s Annual Report on Form 10-K for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Adjusted homebuilding gross margin excluding interest and purchase price accounting for acquired work in process inventory is not a measurement of financial performance under United States generally accepted accounting principles; however, the Company’s management believes that this information is meaningful as it isolates the impact that indebtedness and acquisitions have on homebuilding gross margin and permits the Company’s stockholders to make better comparisons with the Company’s competitors, who adjust gross margins in a similar fashion. This non-GAAP financial measure should not be used as a substitute for the Company’s operating results for the three and six months ended June 30, 2016 and 2015. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Century Communities, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

The following table presents adjusted EBITDA for the three and six months ended June 30, 2016 and 2015. Adjusted EBITDA is a non-GAAP financial measure we use as a supplemental measure in evaluating operating performance. We define adjusted EBITDA as consolidated net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense, (iv) depreciation and amortization expense, and (v) adjustments resulting from the application of purchase accounting for acquired work in process inventory related to business combinations. We believe adjusted EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and items considered to be non-recurring. Accordingly, our management believes that this measurement is useful for comparing general operating performance from period to period. Adjusted EBITDA should be considered in addition to, and not as a substitute for, consolidated net income in accordance with GAAP as a measure of performance. Our presentation of adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our adjusted EBITDA is limited as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

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